Egypt Shipping Report Q3 2012

Through 2012 the key factor affecting the wider Egyptian economy, and the ports and shipping sector, is political uncertainty. After the collapse of the Mubarak regime in early 2011 there are still many question marks over the future of the country. BMI believes Egypt is a country which combines strong medium- to long-term growth potential with significant short-term risks. Looking specifically at the ports and shipping sector, increasing militancy by dock workers has been an important issue. The latest facility to be hit by strikes was Sokhna, which had a 10-day strike in Q212.

BMI will continue to monitor developments at the facilities. In the absence of monthly throughput data, our forecasts are being informed by our macroeconomic outlook and any news stories relating to industrial actions. Most of our forecasts for 2012 have been revised down since last quarter on this basis, though we are still projecting growth, in contrast to 2011 when most Egyptian ports recorded falls in their handling volumes.

Headline Industry Data

- 2012 total tonnage throughput at Damietta is forecast to grow by a subdued 0.7% to 26.06mn tonnes, and to average 1.6% per annum to 2016.

- 2012 East Port Said container throughput growth forecast at 6.2% to reach 2.76mn twenty-foot equivalent units (TEUs), and to average 11.2% to 2016.

- 2012 Egyptian trade real growth forecast at 4.6%, and to average 10.9% over the medium term.

Key Industry Trends

Potential Investment By Maersk To Take Advantage Of Continued Canal Traffic Growth

BMI believes that Danish shipping conglomerate AP Møller Maersk must have confidence in East-West trade through the Suez Canal if the companys reported plans to invest heavily in developing its transhipment hub at the waterways mouth come to fruition.

Foiled Terror Attack

BMI notes that there was a foiled terror attack against a vessel traversing the Suez Canal in March 2012.

We remain doubtful that this will seriously affect the decision of shipping companies to use the waterway, however, and maintain our view that volumes will hold up in 2012.

Further Egyptian Port Strikes Threaten Throughput Forecasts

Continuing a trend of industrial action that BMI has noted at Middle Eastern ports since the advent of the Arab Spring, the DP World-operated Egyptian facility of Sokhna has once again seen its workforce down tools. This is the second time in six months that workers at the facility have gone on strike, following an earlier action in September 2011, and offers downside risk to BMIs conservative throughput forecast for the facility in 2012. Sokhna is not the only Egyptian port to have seen strikes in recent months:

El Dekheila and Alexandria both experienced strikes in September also.

Key Risks to Outlook

The main risks to our forecasts for Egyptian ports are primarily to the downside. Should the country be racked by another wave of political unrest, which remains distinctly possible at this stage, volumes through Egyptian ports could see a contraction like that experienced in most facilities in 2011.

Additionally, any further industrial actions by workers could likewise affect throughput; Sokhna was the latest Egyptian facility to be struck by strikes, with a 10-day action in Q212.

The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.